The Housing Bubble

I hope this doesnt post twice….

Check this out guys. Me and household 6 were looking at this house before I got orders up north. They are asksing 320K. It zillows for between 197-312k. Why are they asking so much? Zillow even put it’s value at 260k. Hell, it last sold for 232k. Am I missing something? No sane person would pay 300+ for this place without a little research.

http://www.zillow.com/homedetails/3415-Willow-Wind-Dr-Pfafftown-NC-27040/5813961_zpid/

BTW,

Just found out Muggy isnt the only one not shooting blanks. The Army has decided during my leave to issue me and the wife another tax deduction. We knew she was in the “zone”, so we decided to see what would happen. We were thinking about another child, one last hurrah. Looks like god has blessed us again. She is about 9 weeks along, so I guess we now have to start thinking about names. I floated the name “Ben”, but the wife wouldnt buy off on it. LOL. I will keep you updated…

Stpn2me

6:14 a.m. here in Michigan. Youse guyz must be feeling lazy this morning if I’m up and the first one here. I clicked on your new D.C. realtor advertiser…

The lending crunch: ‘It is very hard to survive’

NEW YORK (CNNMoney.com) — Small business loans continue to dry up at the nation’s biggest banks. Eleven top TARP recipients — including Wells Fargo, by far the nation’s largest lender to small companies — cut their collective small business loan balance by more than $2.3 billion in December, according to a Treasury report released late Tuesday.

The drop marked the eighth consecutive month of declines for the 11 banks. In that time, their total loan balance has fallen 7%, to $169.4 billion. Seven of the reporting banks have cut their small business loan balance every single month.

“Credit is still tight for many small businesses,” the Treasury acknowledged in a Feb. 10 report.

Dr Doom: China Will Drag Down US Stocks By 20%
Wednesday, 17 Feb 2010 ~ Fast Money

In a rare interview, one of the Street’s most influential strategists sounded the alarm about the next leg down.

And the trouble will likely start overseas, that’s according to Marc Faber, author of the “The Gloom Boom & Doom Report”

You may know Dr Faber by his moniker of “Dr. Doom”, and when this man talks, markets listen. He correctly identified the tech bubble, and now he’s setting his sights on China.

Specifically, Dr. Faber is concerned about the way in which Beijing’s decided to slam the brakes on growth — via a sharp reduction in lending.

That he says, will drag down any and every company that soared higher during the recent China boom.

“I would not buy Chinese stocks here,” Faber tells the Fast Money desk.

IMF to Start Sales of 191.3 Metric Tons of Gold
17 Feb 2010 ~ Reuters

The International Monetary Fund on Wednesday said it will shortly begin selling 191.3 metric tons of gold in the open market under a program launched last year to boost its resources.

To avoid disruptions of the gold market, the IMF said the sales “will be conducted in a phased manner over time.” The fund kept open the possibility that central banks could still purchase some of the gold directly.

The IMF announced last year it would sell a total of 403.3 metric tons of gold, about one-eighth of its total stock, to diversify its sources of income and increase low-cost lending to poor countries.

Jones Apparel closing 166 stores in 2010
Silicon Valley / San Jose Business Journal

Jones Apparel, parent company to Nine West, Anne Klein and Easy Spirit, will close 166 specialty retail stores this year.

The New York-based company declined to say which stores it will close, but indicated that most of the closures will be of mall-based specialty retail stores so that the company can better focus on its outlet stores. It has 317 specialty retail stores in the United States.

A few days ago the Flow of Fund report showed that China was a net seller of US debt and that the UK picked up a lot of the slack by taking a huge chunk of our debt. Today it’s revealed that Britain’s finances suffered another blow last month as the public sector was forced to borrow money in January for the first time on record.
So it begs the question, where did the British find the billions to buy our debt? Did they just borrow money to buy our debt? This just doesn’t make sense.

“UK gov’t borrows in Jan for first time on record”

www google com/hostednews/ap/article/ALeqM5ibg8utRWL5JbkhbXsHXsTa-KKn8wD9DUHE8O1

There was an interesting post late in the day yesterday, by PB and ET-Chicago, talking about Illinois pension underfunding. It’s an angle I hadn’t thought of. Part of the problem with all these states’ budgets - a problem that will continue and perhaps even get worse - is that a large portion of their pension holdings are in U.S. treasuries.

The U.S.-wide numbers (per z1 data):

$207B in private pensions
$176B in state and local government pensions
$117B in federal government pensions

These pension assume some rate of return on these treasuries. The normal rate of return on treasures is around 5-7%. I would image that most of these pension funds have factored in a rate in that neighborhood, perhaps 4-5% to be conservative (haven’t seen any documentation showing what they actually use - if anyone knows of any let me know). However currently the average rate of return on treasuries is only 3.3%! As long as the Fed keeps rates low - these pensions are going to be more and more underfunded.

Here is an article ET posted last night, regarding Illinois pensions.

“In 2008, the four large public pension plans in Illinois had combined assets of $65.7 billion. The combined liabilities of these four plans (calculated under flawed GASB rules) were $151.1 billion, for a shortfall of $85.4 billion.

If one uses a more theoretically appropriate rate on treasury yields, the present value of the liabilities is $284.8 billion, for a shortfall of $219.1 billion! That is more than 2.5 times greater than the official statistics indicate!”

Rock and hard place for the Fed. Sure they can try to pump up the economy by keeping rates down - but they’re absolutely screwing everyone’s pensions in the process!

War on Savers

Dothan’s Sony plant set to close [Dothan Eagle, Ala.]
(Dothan Eagle (AL) Via Acquire Media NewsEdge) Feb. 17–Sony is closing its Dothan operations after 33 years in business.

The company’s 320 full-time employees were informed just after lunch Wednesday that the plant will shut down in six months. The company is relocating its magnetic tape production and print media product line to existing manufacturing facilities in Japan.

http://www.signonsandiego.com/news/2010/feb/17/housing-affordability-index-drops-back-below-50/

“For the fourth quarter, San Diego’s median price was listed at $319,000 and median income at $74,900. San Diego ranked as the nation’s most unaffordable market in the second quarter of 1996, when the median price was $165,000 and median household income was $46,600.”

Interesting is that San Diego housing prices would have to fall around 17 percent just to fall to the same multiples of income needed to buy a house in 1996 when San Diego was the least affordable housing market in the nation.

Also putting in perspective just how overpriced housing still is, locally and nationally, is that San Diego is just the 13th most unaffordable housing market now versus most unaffordable in 1996. That’s with a house costing 4.25 multiples of income now versus 3.5 then. Also, supply and the state of the economy should support lower prices now versus 1996.

Wal-Mart holiday sales fall, forecast light.

SAN FRANCISCO (Reuters) - Wal-Mart Stores Inc said sales at its existing U.S. namesake stores fell during the holiday quarter and forecast results for the current quarter that could miss Wall Street estimates.

Daimler Q4 net loss disappoints markets.
German car and truck maker Daimler reports 4th quarter net loss of $482 million.

STUTTGART, Germany (AP) — German car and truck maker Daimler AG lost euro352 million ($482 million) in the fourth quarter amid the global economic slump, contributing to a larger-than-expected loss on the year and sending shares down sharply.

China in a dilemma as home prices soar.
Wed Feb 17, 2010

SHENZHEN, China (Reuters) - In the hard, exhaust-choked reality of his days trawling Longhua’s clogged roads, taxi driver Zhang Bo’s ambition to buy a small flat for his young family has slipped out of reach for now.

Housing Market

Like many Chinese who covet real estate as a symbol of stability and social stature, Zhang is dismayed at the alarming climb of apartment prices in his adopted city of Shenzhen in southern China.

“People can’t afford new flats anymore,” said Zhang, 28, who drives a taxi to make ends meet after his small electronics factory went belly-up during the financial downturn last year.

“It’s a very distant goal for us. Something we can only dream about,” said the spiky-haired native of Hubei province, who takes home around 6,000 yuan ($880) in cab fares a month. He likes to joke that he now has to work three months just to buy one square meter (three feet) of residential space in the city’s suburbs.

” [T]he only sort of liberty that is real under democracy is the liberty of the have-nots to destroy the liberty of the haves.”

~H.L. Mencken

~ Dr. Walter Williams takes a pot shot at the enormously expensive 2010 Census.

“Unless a census taker can show me a constitutional requirement, the only information I plan to give are the number and names of the people in my household. The census taker might say, ‘It’s the law.’ Thomas Jefferson said, ‘Whensoever the General Government (Washington) assumes undelegated powers, its acts are unauthoritative, void, and of no force”.

I am working in Albuquerque this week. I work for an insurance company (when I’m not playing golf) and went out to a landscape company job site with the General Manager yesterday. He moved from Dallas to Albquerque in 2005 and bought a house. He said the house is up 100K since he bought it. I had to bite my tough not to say “really all I hear are how far prices have fallen” When I tell people in New Mexico about how bank owned properties have falled 75% in Phoenix they can hardly believe it. Still in denial here I guess.

Rumor:
The US Taxpayer is Bailing Out Greece, Ireland, Italy, Portugal, Spain, Wall Street, and any thing, any country, or any body that is TBTF.

Ron Paul thinks so. I’m not a Ron Paul guy, but he could be right.

http://www.libertynewsonline.com/article_358_28601.php

Roidy

Have Obama’s federal government weatherize your home for only $57,362 each
February 18, 2010 | LA Times

Who could forget the $5 billion in Obama administration stimulus money that was going to rapidly create nearly 90,000 green jobs across the country in these tough economic times and make so many thousands of homes all snuggy and warm and energy-efficient these very snowy days?

Well, a new report due out this morning will show the $5-billion program is so riddled with drafts that so far it’s weatherized only about 9,000 homes.

Based on the initial Obama-Biden program promise that it would create 87,000 new jobs its first year, that would be about 10 jobs for each home weatherized so far. Makes for pretty crowded doorways.

ABC News reports that the General Accountability Office will declare today that the Energy Department has fallen woefully behind — about 98.5% behind — the 593,000 homes it initially predicted would be weatherized in the Recovery Act’s very first, very chilly year.

The Energy Department is run by Steven Chu, like President Obama a Nobel Prize winner. You’ll never guess what the federal government blames for the lack of significant progress.

RED tape.

Not duct tape. Not weatherstripping. But that infamous RED tape. In the form of, well, forms.

Drilling Ban To Cost Trillions
Investors Business Daily ~ 02/16/2010

Energy: A new study shows that our reluctance to develop domestic energy will cost the beleaguered U.S. economy trillions in opportunity costs, reduce our gross domestic product and increase our trade deficit.

From trying to stimulate jobs in nonexistent ZIP codes at great expense to worshiping the false gods of climate change, our biggest deficit these days may be in the area of common sense. A new study shows that many of our wounds are self-inflicted as we forgo the wealth and jobs to be found in our waters and under our feet.

The study by Science Applications International Corp. at the request of the National Association of Regulatory Utility Commissioners, the Gas Technology Institute and others shows the U.S. economy will suffer $2.3 trillion in lost opportunity costs over the next two decades, monies that would go a long way to reining in runaway deficits and creating economic growth.

Critics will say this is another self-serving study paid for by oil industry groups, but unlike the climate change fantasies concocted by the Intergovernmental Panel on Climate Change and Britain’s Climatic Research Unit at the University of East Anglia, the study’s data can survive fact-checking and the conclusions are rooted in reality.

Question yesterday from Carl Morris:

Also, was it you that posted a breakdown of the most common posters on the blog a week or two ago that disappeared soon after it was posted? I thought it was statistically interesting.

Yes, I did post a list of stats and it did disappear.

I hope that it was taken down because it was seen as inappropriate - it had Oly’s name in it.

I did not learn of her passing until a day or so after I posted the stats.

Stagflation dead ahead…
We all know this could happen. Questions to ponder, how many other countries explicitly tie their monetary policy directly to our FED? Colombia, Saudi Arabia, I know there are quite a few. So when Ben Bernanke sets short term rates to zero and they are forced to do the same thing to their banking systems.
So PPI shoots up by 1.4% (The producer price index is up 4.6% in the past year, the largest year-over-year gain since the financial crisis began in late 2008. The core PPI is up 1% in the past year.) and claims jump. Cash (fiat money) is in a weak position unless we can force commodity prices down.

Jobless Claims, Inflation Jump as Economy Wobbles.
www cnbc com/id/35457298

Enjoy the Year of the Tiger Short Sale.

The Financial Times
US banks turn to short sale strategy
By Suzanne Kapner in New York

Published: February 17 2010 02:00 | Last updated: February 17 2010 02:00

Big US banks including Bank of America, Wells Fargo, JPMorgan Chase and Citigroup are turning to a new tactic to clear their books of troubled mortgage loans: short sales, in which homeowners settle their debts by selling their properties for less than the mortgage value.

Short sales are expected to climb sharply this year as home values continue to plunge, leaving many borrowers underwater on their mortgages.

As moratoriums on mortgage payments and temporary loan modifications expire, a record 4.3m homes are entering or are in foreclosure, up from 3.4m in 2009. This creates an inventory overhang that will weigh on the housing market. Short sales are a way to help clear the pipeline.

Mark Zandi, chief economist of Moody’s Economy.com, forecasts short sales and another type of transaction - known as a deed-in-lieu, in which the homeowner turns over the deed to a property in lieu of paying the debts - to total 20 per cent of all lost home sales this year, up from 15 per cent last year.

After spending most of the past year focusing on largely ineffective loan modification plans, BofA, Wells Fargo, JPMorgan and other large banks said they were shifting their attention to short sales.

“If 2009 was the year of the loan modification, 2010 will be the year of the short sale,” said Jim Klinge, a real estate broker in San Diego, California.
…
The moves come as the US government prepares to launch a programme in April that encourages homeowners, lenders and investors to complete short sales by providing up to $3,500 in incentives.

Whistler Past the Graveyard?

Olympic site may be auctioned off during time of Games:

WHISTLER, British Columbia (AP) — At the height of its Olympic glory, Whistler — the ski resort hosting glamorous Alpine events at the Winter Games — may be headed for the auction block.

It’s owned by a New York hedge fund that is reportedly behind on a $524 million loan payment, the result of flagging resort business and plummeting property values.

Creditors want their money back, and they’re playing hardball — calling an auction to put Whistler and other property up for sale Friday, the same day Bode Miller is scheduled to compete for his second Olympic medal in the men’s super-G.

The backstory is a parable of our economic times: high-stakes hedge-fund gambles, the collapse of Lehman Brothers and the possible bankruptcy of a company that owns some of North America’s most prestigious resorts.

If Whistler does get sold — meaning the slopes, the lifts, the property, all of it — some locals worry about an uncertain future.

“We don’t know what these new guys want to do with the mountain. It can change your whole life, right?” said Ian Ribera, manager of Castro’s Cuban Cigar Store in Whistler village.

The story begins in the distant days when Wall Street was on a seemingly unstoppable roll. Fortress paid $2.8 billion for Intrawest, which operates Whistler and other elite resorts in North America.

It borrowed about half the money from big investors like Lehman. Analysts say the idea was that soaring property prices would turn Intrawest into a massive profit machine.

Fast-forward to the 2010 Winter Games, and the world is a different place: Resorts are struggling and property prices have plunged, making it difficult to raise money in credit markets to meet loan commitments.

Jobless Claims in U.S. Increased 31,000 Last Week to 473,000
February 18, 2010

Feb. 18 (Bloomberg) — The number of Americans filing first-time claims for unemployment insurance unexpectedly increased last week, pointing to an uneven recovery in the labor market.

Initial jobless applications rose by 31,000 to 473,000 in the week ended Feb. 13, Labor Department figures showed today in Washington. The total number of people receiving unemployment insurance was unchanged and those receiving extended benefits increased.

The private mortgage securitization firms used to claim the GSEs had an unfair advantage in the market place. How should the U.S. taxpayer feel upon learning now that securitization is a broken, money-losing enterprise, the zombie GSEs have cornered a seventy-five percent taxpayer-subsidized market share? Propping up the value of middle class America’s most valuable asset is proving downright expensive.

AEI OUTLOOK SERIES
The Dead Shall Be Raised: The Future of Fannie and Freddie
By Peter J. Wallison | AEI Online
(February 2010)

Click here to view this Outlook as an Adobe Acrobat PDF.

January-February 2010

The renewed interest in Fannie Mae and Freddie Mac is premature. They are currently the mainstays of the U.S. housing market–more important now than they were before being placed in a government conservatorship in September 2008. Many observers do not believe the two government-sponsored enterprises (GSEs) can survive the immense losses they will cause taxpayers, but this is far from true. For Fannie and Freddie to be eliminated, a new mortgage-financing system must take their place, but there is not even a hint of a replacement on the horizon. Once the housing market recovers, the GSEs will still be the only game in town, and supporting them will continue to be the course of least resistance for Congress. Moreover, it will not be easy to implement any of the alternatives to reestablishing Fannie and Freddie as GSEs. Nationalizing or reorganizing them as public utilities would both have significant drawbacks, while privatizing the GSEs–the most sensible approach–would require a major change in public attitudes about securitization. Sadly, in the absence of viable alternatives, their restoration as GSEs seems the most likely outcome.

Key points in this Outlook:

* It is unlikely that Fannie Mae and Freddie Mac, currently in a government conservatorship, will undergo any significant structural changes before the housing market is stable

* The future of these government-sponsored enterprises (GSEs) is not yet decided; Fannie and Freddie could be nationalized, restructured as public utilities, privatized, or simply reestablished as GSEs operating as they did before the financial crisis.

* Privatizing Fannie and Freddie is the best option as a matter of policy, but in the absence of alternatives, Congress is likely to take the path of least resistance and return the GSEs to their precrisis status quo.

* Still, once the securitization market is functioning again, Fannie and Freddie can be privatized by reducing the conforming loan limit over time.

It has been an interesting few weeks for the small band of stalwarts who have always followed the depredations of Fannie and Freddie. The Treasury’s Christmas Eve action,[1] which removed the cap on the financial support it would provide the two companies, awakened renewed interest in what they will ultimately cost taxpayers. Then, in a surprise move, Representative Barney Frank (D-Mass.)–the GSEs’ long-time sponsor-protector–announced that the House Financial Services Committee, which he chairs, would seek to abolish them. All this interest–and certainly Barney Frank’s promise–is probably premature, since the two companies, still under the control of the Obama administration’s conservatorship, are the mainstays of the housing finance market in the United States today. Indeed, because they have securitized 75 percent of all mortgages originated in the United States in the first three quarters of 2009, the GSEs are playing a more prominent role in the U.S. housing market now than ever before.[2] It is unlikely, accordingly, that Congress will seriously tinker with the GSEs until the housing market stabilizes or another credible source of financing for middle-class homes capable of replacing them becomes available.
…

Producer Prices in U.S. Increase More Than Forecast (Update1)

Feb. 18 (Bloomberg) — Wholesale prices in the U.S. accelerated more than anticipated in January, led by a jump in costs of energy, light trucks and pharmaceuticals.

The 1.4 percent rise in prices paid to factories, farmers and other producers followed a 0.4 percent increase in December, according to figures from the Labor Department in Washington. Excluding food and fuel, so-called core prices rose 0.3 percent, exceeding the median forecast in a Bloomberg News survey.

Raw materials costs rose the most in more than three years as factories boosted production to meet demand of a growing global economy. Capacity utilization below its two-decade average and a lack of job growth may limit the ability of suppliers to pass on those costs, allowing the Federal Reserve to keep interest rates near zero to help bolster the economy.

David Letterman calls Olympics officials ‘hypocrites’ after luge death
by Ken Tucker
Categories: Controversy, David Letterman, News, Olympics, Sports, TV Last Night, Television

Last night, after his opening-monolgue jokes, David Letterman sat down at his desk and delivered a casually stinging rebuke to the Olympics official who accused dead luge competitor Nodar Kumaritashvili of making “a mistake… that had fatal consequences.”

“A ‘mistake’?” said Letterman witheringly. “I just wonder if it had anything to do with those exposed steel girders… Don’t blame the kid, for god’s sake,” the host said, referring to Kumaritashvili, the 21 year-old representative of the Russian country of Georgia. “He had said to his dad. ‘I think something’s a little haywire here; I’m a little bit frightened about the track’…

“For them to say that he made a mistake, that just stinks,” continued Letterman. Why is it, he asked, that “they then repaired the track and covered up the girders and started [the race] from the women’s starting point?

“You know what it is? It’s hypocrisy, ladies and gentlemen,” said Letterman to loud applause.
…

Question du juor: Does Goldman, whose alumni permeate high levels of the U.S. government, do for Uncle Sam what they did for Greece?

Since when did banking morph into the business of hiding debt to boost perceived values? Or has that always been what banking was about?

Goldman’s Greek grab

Firm hid troubled nation’s debt to boost returns

By PAUL THARP

Last Updated: 9:33 AM, February 18, 2010

Global leaders are bearing down on Goldman Sachs, demanding to know whether the firm helped cover up Greece’s cash crisis in order to peddle $15 billion in government IOU’s to unsuspecting investors.

Outrage swelled yesterday following new reports that Wall Street’s most profitable bank concocted financial transactions in 2001 that allowed Greece to sweep its debt troubles under the rug, making its bonds seem like safe bets. At the same time, Goldman was selling $15 billion of Greece’s government bonds and IOUs to clients without disclosing Athens’ deficit, according to reports.

German Chancellor Angela Merkel said it would be a “scandal” if the banks that brought the world to its financial knees had also helped Greece “falsify its budget.”

A second day of protests erupted on the streets of Athens and another bomb explosion occurred, this one outside a police building, causing damage but no injuries. Rallies and wildcat strikes continued to disrupt government services.

None of it softened Greece’s vow to solve its debt crisis with freezes of public-servant payrolls, layoffs and other cost cuts.

Meanwhile, EuroStat, which tracks EU regulatory documents, demanded that Greece turn over all files related to the financial transactions by Goldman and other banks. The probe was expected to spread to other EU countries that may have made similar deals.
…

Standard rule of thumb: Initial claims north of 400K are indicative of an ongoing recession.

Got green shoots of stagflation?

Economic Report

Feb. 18, 2010, 9:40 a.m. EST

Jobless claims rise 31,000 to 473,000
Total jobless claims rise to 11.8 million, including federal benefits

Producer prices soar 1.4% on energy costs

By Rex Nutting, MarketWatch

WASHINGTON (MarketWatch) — The number of people filing initial claims for state unemployment benefits rose by 31,000 to a seasonally adjusted 473,000 last week, the Labor Department reported Thursday, a sign that labor markets remain very weak.
…

The PPT seems determined to make U.S. stock owners look like the smartest guys in the room (again).

Another Government Scheme, It’s for your own good.

“The Treasury and Labor departments are asking for public comment on ‘the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams.’

“In plain English, the idea is for the government to take your retirement savings in return for a promise to pay you some monthly benefit in your retirement years.

“They will tell you that you are ‘investing’ your money in U.S. Treasury bonds. But they will use your money immediately to pay for their unprecedented trillion-dollar budget deficits, leaving nothing to back up their political promises, just as they have raided the Social Security trust funds.”

Ooooh, I just got this in my inbox:

I came across a copy of your resume and think you may be a great shot for a few full time positions I’m currently working on. Our clients are among the top financial firms in the NY/CT area.

I could go work for a “top financial firm”. Hold me back!

Colo. House cutting $475 million from state budget
February 18, 2010

DENVER (AP) — Colorado lawmakers slashed jobs and state services Wednesday in an effort to cut another $475 million from this year’s budget, targeting education, prisons and Medicaid patients.

The 31 bills approved by the House cut nearly every sector of state government as lawmakers worked to cut $1.5 billion over the next two years. The bills face a third reading before they head to the Senate.

On Tuesday, lawmakers approved and sent to the governor bills that would raise $118 million over the next two years by eliminating tax breaks and imposing a 2.9 percent state sales tax on products including candy and soda, downloaded software and pesticides.

Interesting story on NBC news last night. A study showed that 47% of Americans are now taking some kind of prescription drug. of that 47% 34 % take more than one. Thats about 150 million people on drugs.
I guess the place to start fixing the health care system, would be with the drug companies and the hypochondriacs. No wonder our water supplies are showing residues of prescription drugs.
maybe the movies “Crazies ” is based on people drinking the water and going crazy from the combo of drugs.
Seriously, though, something is terribly wrong, when that many people are on some type of prescription drug.

Greetings from the “newly re employed” front. Went from jobless to working 7 days a week; might get a day off on Sunday.

Now that I’m back “in circulation” in a town with some aviation activity, I’m getting caught up with “Rumor Control”…….used aircraft prices have stabilized at 60% of 2007-8 prices. Buyers are coming out of the woodwork, buying all the best airplanes (including my new employer……paid 13 mill for an aircraft that would have sold (quickly) for somewhere north of $20 mill in 2008).

The banks have repossessed a lot of airplanes. Trouble is, like houses, they are just parking them and doing nothing to maintain them. And like a house in Florida, they deteriorate rapidly if not used or improperly stored. For example, the engine OEMs are requiring hot-section inspections on improperly stored engines before they will give the “blessing” for them to fly again. Airframe corrosion issues are also going to be a huge problem.

A lot of formerly good, but older aircraft are going to be “uneconomical to repair” sooner rather than later.

Another “eating our own children issue” is going to be the decimation of all the younger guys in the aviation business. The industry has spent ten years recruiting and training new guys to replace the old guys eventually. Now they have all been laid off. There is going to be a real problem getting younger guys in the airplane fixing business, and the ones that are there won’t have any “adult supervision” for the most part if/when they do come back.

Even top democrats are seeing the train wreck a-coming with the democrat blind and total support of public unions.

———————–

Democrat Caddell rips White House for obeisance to organized labor
By Jon Ward - The Daily Caller - 02/17/10

Longtime Democratic strategist Pat Caddell on Wednesday blasted the Obama White House for creating “a world in which there is no dissent,” following his banishment from Colorado Democrat Andrew Romanoff’s campaign for Senate.

Caddell said he is being ostracized for sounding alarms about the problem that public sector unions are posing for the Democratic party. He said he supports industrial unions but that government employee unions such as the SEIU — which is one of the Democratic party’s biggest campaign contributors — violate the raison d’etre of the party, which is to “stand up for ordinary average Americans, not money and special interests.”

“I think the public unions are going to take the country and the Democratic party down the tubes,” Caddell said. “They’re in the business of taking care of — of asking taxpayers, asking ordinary people, to pay for people who make twice as much as they make, with benefit packages they will never see, and they’re told, you may not cut those.”

He pointed to health-care negotiations, where the SEIU has preserved health-care benefits from cuts, and to the $787 billion stimulus, which has benefited mostly state government employees so far. He said public sector employee unions in California have contributed to the state’s fiscal crisis by demanding that taxpayers subsidize their job status and guaranteed salaries and benefits.

Caddell said he was not attacking government employees but that the system “has grown into something far beyond what it should be.”

“How are you going to tell a person who makes $40,000 that they must pay money to make sure that people keep jobs who make $80,000, roughly, and who have defined pensions that they will never see?” Caddell said. “You cannot ask ordinary Americans who have no jobs, whose pensions have been ransacked, and whose pay has been stagnant, to keep rewarding people who don’t face the same kind of conditions and risk.”

“The people who pay for it are suffering,” he said. “The taxpayers are going to explode. This is the big coming issue of our time.”

Wouldn’t someone making monthly payments on a $379,000 loan owe $379,000 plus future interest payments? As usual, I’m confused by the San Diego Union-Tribune journalist’s financial analysis.

Of course, given that the mortgage crisis is contained, and that the pool of potential additional late payers shrinks as the current pool of late payers increases, my extrapolation is highly likely to prove unduly pessimistic. A logistic growth model of late payment diffusion is more appropriate than an exponential model in this context.

10 percent reportedly late on mortgages
County figure up from 6.2 percent year earlier

By Roger Showley, UNION-TRIBUNE STAFF WRITER

Thursday, February 18, 2010 at 12:04 a.m.

Nearly 10 percent of San Diego County homeowners with mortgages are at least two months late on their payments and are likely to default and fall into foreclosure, a sampling of area credit records shows.

According to Chicago-based Trans-Union, a credit and information management company, a record 9.9 percent of mortgage holders in the county were 60 days or more delinquent in the fourth quarter of last year. That’s up from 6.2 percent a year earlier and 1.5 percent, the historic average, at the beginning of 2007.

California’s delinquency was even higher, 11 percent, while the nation as a whole was at 6.9 percent — both record levels. TransUnion used a sample of 27 million consumers’ credit records, about one-tenth of the total available, to calculate the delinquency rate.

TransUnion said the average mortgage debt for San Diego households at the end of 2009 was $379,271, about $10,000 less than at the beginning of 2007. With the median home price at $325,000 in the fourth quarter, that suggests the typical homeowner owes more than his or her mortgage.

A monthly mortgage payment on a $379,000, 30-year fixed loan currently runs about $2,034, so someone two months in arrears would owe about $6,000, including the current payment.
…

How many of us have an effective tax rate of under 17%

Feb. 18 (Bloomberg) — The 400 highest-earning U.S. households reported an average of $345 million in income in 2007, up 31 percent from a year earlier, IRS statistics show.

The average tax rate for the households fell to the lowest in almost 20 years.

The figures for 2007, the last year of an economic expansion, show that the average income reported by the top 400 earners more than doubled from $131.1 million in 2001. That year, Congress adopted tax cuts urged by then-President George W. Bush that Democrats say disproportionately benefit the wealthy.

Each household in the top 400 of earners paid an average tax rate of 16.6 percent, the lowest since the agency began tracking the data in 1992, the Internal Revenue Service statistics show. The top 400 paid $23 billion in taxes in 2007, up from $18 billion a year earlier, and a bigger amount than any year since 1992.

Their average effective tax rate was about half the 29.4 percent in 1993, the first year of President Bill Clinton’s administration, when taxes were increased. The top 400 earners reported an average of $46 million of income that year.

Our gov works for the rich, there is just no way you can come to any other conclusion. They throw just enough at the masses to keep them from rioting.

The FED, Pension funds, PIIGS, Wall Street/GS and assorted other deadbeats and their enablers are finding out that while a Ponzi scheme is all fun ‘n games in the beginning, the later stages are getting increasingly difficult to manage. Every hole you patch up on one end tears another leak somewhere else. Too many unintended consequences once you’re caught in a web of lies and deception.

“U.S. Economy Grinds To Halt As Nation Realizes Money Just A Symbolic, Mutually Shared Illusion”
“Though raising interest rates is unlikely at the moment, the Fed will of course act appropriately if we…if we…” said Bernanke, who then paused for a moment, looked down at his prepared statement, and shook his head in utter disbelief. “You know what? It doesn’t matter. None of this—this so-called ‘money’—really matters at all.”
“It’s just an illusion,” a wide-eyed Bernanke added as he removed bills from his wallet and slowly spread them out before him. “Just look at it: Meaningless pieces of paper with numbers printed on them. Worthless.”

….read more at The Onion
enjoy

Just heard that a plane crashed into an FBI building in Texas. No details.

Someday my post will show.

The plane that hit the FBI building was a small single-engine plane apparently.

Slow and steady jobs bleed… Heading over seas.

Chip Gear Maker Closing Irvine Plant
Orange County Business 2-18-10

A Pennsylvania maker of gear to produce chips is closing its Irvine Ca. plant, laying off 56 people and shifting the work to Malaysia and Singapore.

Kulicke & Soffa Industries Inc., based in the Philadelphia suburb of Fort Washington, plans to cut the workers from its Irvine plant during the next two years, according to a Securities and Exchange Commission filing.

Too bad no SFRs in our area sell for anywhere near $319,000.

Affordability of housing dips in county
By Roger Showley, UNION-TRIBUNE STAFF WRITER

Thursday, February 18, 2010 at 1:49 a.m.

San Diego County’s housing affordability has again dipped below the 50 percent level, the National Association of Home Builders said yesterday.

The 48.1 score in the Housing Opportunity Index represents the percentage of homes sold in the fourth quarter that a median-income household could afford using standard underwriting guidelines.

The new level positions San Diego as the 13th-most unaffordable market among 227 areas surveyed.

San Diego’s affordability peaked at a record 58.8 percent in the first quarter of last year. The region ranked 31st among least-affordable areas in the third quarter of 2008, its best showing in the 19 years of the survey.

The latest figures were based on a fourth-quarter median price of $319,000 for a single-family resale home, a 30-year, fixed-rate mortgage interest rate of 5.1 percent and a down payment of 10 percent. The median household income in the quarter was $74,900, and the survey assumes that a household will spend no more than 28 percent of income on housing.

Nationally, the index stood at 70.8 percent. Eleven of the 20 least-affordable markets were in California. New York ranked first at 19.7 percent and San Francisco was second at 22.3 percent.

Delaware Machinery hit by $18 million lawsuit.

MUNCIE — Plagued by rumors of layoffs and closing and complaints from customers who didn’t get product they paid for, Muncie die-cast tool manufacturer Delaware Machinery has been hit by a lawsuit by First Merchants Bank, which seeks repayment of $18 million in loans.

The bank — which has itself been troubled by tens of millions of dollars in losses — has filed a Delaware Circuit Court lawsuit against the 62-year-old firm, its officers and business partners over a series of loans that began in September 2007.

First Merchants is seeking repayment of six loans worth a total of $18.6 million and interest amounting to $2,939 per day.

Spoke with a local real-a-tor this A.M. He tells me that the NAR lobby is pushing hard for the $8000 tax credit to be extended. No surprise there, however they are also pushing for an additional $2000 for anyone buying a newly constructed house. For a total $10,000 tax credit, to be extended until Jan.2011.

Has anyone else heard this?

Mayor rolls out the un-welcome carpet for Barry…

Las Vegas, NV (KTNV) - Mayor Oscar Goodman has refused an invitation to meet with President Obama when he arrives in town on Thursday. Mayor Goodman called President Obama a slow learner after he told Americans not to blow money on a weekend in Las Vegas if they were saving to put their kids through college.

“I’ve got other things to do quite frankly for my constituents here in Las Vegas who rely on me to do the right thing as a mayor,” explained Mayor Goodman.

Another O.C. women’s clothing store is closing
February 18th, 2010 O.C. Register

Shopgirls by Lisa & Helen in Costa Mesa is slated to close next month, said co-owner Helen Platt.

The closing sale began earlier this month. The discount ranges from about 30 percent to 60 percent. The boutique, located at 369 E. 17th St., sells women’s clothing by brands such as Rebecca Taylor and Catherine Malandrino, sunglasses by Dita, jewelry and perfume.

Platt said she and her business partner Lisa Gurney are closing their only 1,300-square-foot shop because they have three young children between the two of them and due to the weak economy. When they started the store six years ago, they didn’t have children and had more time to invest in the business. Also, the economy has hurt store sales since September. Platt declined to say how much sales have fallen since then, but added that they have “dropped a lot.”

The transcript for this program is highly recommended listening when it becomes available. The commentators are highly skeptical about banks’ claims that they are not withholding inventory. Matt Battiata’s proposed remedy to the San Diego housing malaise: Force banks to stop withholding inventory from the market.

These Days
S.D. Home Prices Fluctuate, Sales Still Down

An audio recording of this interview will be posted here within a few hours of the live broadcast. A transcript will also be added within 24 hours. Thank you for your patience.

By Maureen Cavanaugh, Hank Crook

February 18, 2010

Maureen Cavanaugh: The new year has started with some unsettling news for San Diego’s housing market. There was a 7.6 percent drop in the median home price last month. That drop wiped out all the small gains in housing prices during the last quarter of 2009.

But market analysts tell us not to worry, January and February are unreliable months for San Diego real estate. The real story about housing prices will be told this spring.

So where does all that leave us?

Guests

Roger Showley, staff writer for the San Diego Union-Tribune who covers real estate.

Matt Battiata, CEO of the Battiata Real Estate Group.

So much for that scientific scam.

UN climate chief quits, leaves talks hanging
By ARTHUR MAX (AP) – 27 minutes ago

AMSTERDAM — The sharp-tongued U.N. official who shepherded troubled climate talks for nearly four years announced his resignation Thursday, leaving an uncertain path to a new treaty on global warming.

Exhausted and frustrated by unrelenting bickering between rich and poor countries, Yvo de Boer said he will step down July 1 to work in business and academia.

With no obvious successor in sight, fears were voiced that whoever follows will be far less forceful than the skilled former civil servant from the Netherlands.

His departure takes effect five months before 193 nations reconvene in Cancun, Mexico, for another attempt to reach a worldwide legal agreement on controlling greenhouse gas emissions, blamed for the gradual heating of the Earth that scientists predict will worsen weather-related disasters.

The resignation “comes at the worst time in the climate change negotiations,” said Agus Purnomo, Indonesia’s special presidential assistant on climate change. “His decision will ultimately add to the difficulties we already have in reaching a successful outcome in Mexico.”

De Boer made the announcement just two months after a disappointing summit in Copenhagen that ended with a nonbinding accord brokered by President Barack Obama promising emissions cuts and immediate financing for poor countries — but even that failed to win consensus agreement.

In an AP interview last month, de Boer acknowledged that the summit left him deeply disheartened. “After Copenhagen I was very depressed. I was depressed for a few weeks,” he said.
…

This is on the Austin American Statesman website - apparently a note posted by pilot explaining the plane crash into a building today - angry at IRS. The paper says that the pilot’s home is on fire.

The mayor is making a statement now.

after the wwws: statesman.com/blogs/content/shared-gen/blogs/austin/blotter/entries/2010/02/18/internet_note_posted_by_man_li.html

U.S. Cracks Down on ‘Contractors’ as a Tax Dodge
February 18, 2010 ~ New York Times

Federal and state officials, many facing record budget deficits, are starting to aggressively pursue companies that try to pass off regular employees as independent contractors.

President Obama’s 2010 budget assumes that the federal crackdown will yield at least $7 billion over 10 years. More than two dozen states also have stepped up enforcement, often by enacting stricter penalties for misclassifying workers.

Many workplace experts say a growing number of companies have maneuvered to cut costs by wrongly classifying regular employees as independent contractors, though they often are given desks, phone lines and assignments just like regular employees. Moreover, the experts say, workers have become more reluctant to challenge such practices, given the tough job market.

The Federal Reserve’s Exit Strategy: Unlegislated Bailout of Fannie and Freddie.
How to spend (up to) $1.5 trillion without Congressional approval (updated) ~ John P. Hussman, Ph.D. 2-16-10

http://www.hussmanfunds.com/wmc/wmc100216.htm

Rates on 30-year mortgages drop to 4.93 pct, second straight weekly decline. (AP)

Consumers spent at 2009 levels in January
February 18, 2010

WASHINGTON (Reuters) - American consumers say they reduced their spending in January to levels similar to early 2009, when the U.S. economy was still in recession, according to a Gallup poll released on Thursday.

The findings, which contradict U.S. data suggesting spending strength in January, showed consumers in all income brackets and geographic regions spending less in January vs. December in stores, restaurants, gas stations and online.

In many cases, Gallup said consumers spent less in the first month of 2010 than in January 2009, a weak economic period when monthly retail sales fell nearly 10 percent and the economy headed for a 6.4 percent first-quarter contraction.

Looks like the excellent job loss report will drive the DOW back to 10,400.

‘Please Rob Me’: The website that tells the world when you’re not at home. Mail Foreign Service ~~ 18th February 2010

A website that provides minute by minute updates on people who are not at home has sparked concern that it will encourage burglars.

The site, called Please Rob Me, launched this week and has been criticised for being the perfect tool for any self-respecting housebreaker.

But the three brains behind the website insist they’re not helping criminals, but highlighting the dangers of the latest social networking craze of announcing to the world where you are at any given moment via the internet.
Please Rob Me

Website Please Rob Me launched this week and has been criticised for being the perfect tool for any self-respecting housebreaker

Social networking crazes such as Foursquare, in which users post their location online, are a goldmine for potential burglars, the website’s founders said.

The Please Rob Me website says: ‘Our intention is not, and never has been, to have people burglarized.’

Instead they are trying to alert people to the danger of putting too much information on the world wide web.

The Dutch website channels information from other networking sites like Twitter into one place, listing ‘all those empty homes out there’ and providing a running total of ‘new opportunities’.

The information it provides on people’s movements is searchable by city or by their Twitter username.

‘We’re leaving the lights on when we’re going on a holiday, but we’re telling everybody on the internet we’re not home,’ said co-founder Frank Groeneveld, 22.

‘The danger is publicly telling people where you are. This is because it leaves one place you’re definitely not - home.

‘We’re not trying to get people robbed, but helping them not to get robbed. We’re just presenting this information in a more obvious way. And that’s our point: Everyone can see this on Twitter.

Just as I thought…

China’s Long, Strange Road Trip
In his latest book Peter Hessler gets his driver’s license and explores the villages and factory towns of China.

By TATIANA LAU WSJ Opinion Journal

“Driving in China is so stressful that among expatriates, obtaining a license is often met with incredulity rather than congratulations. In a country that has only just surpassed the United States in automobile sales but whose death toll on the roads is five times higher, why would a foreigner risk life and limb by getting behind the wheel? To which Peter Hessler responds, “I can’t believe you get into cabs and buses driven by graduates of Chinese driving courses.”

Hudson Valley Resort files for bankruptcy.
Times Herald Record ~ 2-18-10

KERHONKSON — Suffocating under more than $26 million of debt, the Hudson Valley Resort & Spa has declared bankruptcy in a last-ditch effort to avoid foreclosure.

Owners of the resort filed Chapter 11 bankruptcy in January, just as the holder of their largest mortgage finished a foreclosure case against them. Chapter 11 could allow the owners, who operate under Everyday Logistics LLC, to reorganize debts and keep the hotel.

The 323-room resort, formerly known as the Granit Hotel, has stayed open while its owners and lenders battle in court. Eliot Spitzer, one of the Hudson Valley Resort’s managing partners, said he couldn’t talk about the bankruptcy when contacted at his Monsey office this week. (He is not the former governor of New York.)

“This does not affect the actual operation of the hotel,” said Spitzer, who owns the property with his partner, Michael Steinberg. “I think we’ll be all right when it’s all over.”

Spitzer and Steinberg owe more than $25 million on six mortgages. They purchased the hotel, its 18-hole golf course and the 400-acre property in 2006 for $18.5 million. The full-market assessed value of the property is $5.8 million.

Hudson Valley Resort & Spa is the largest private employer in this mountain town, with some 150 people on its payroll.

Henry Zabatta, who owned the hotel when it was the Granit, is familiar with the scenario that’s unfolding. Zabatta went bankrupt on the hotel in 1997 with a $5 million mortgage and said the current owners paid too much for it.

“I don’t know who brokered that deal, but it was highway robbery,” he said. “You can’t possibly operate a hotel in this region with that much debt.”

From the Sunday New York Times.

“Even as the crisis was nearing the flashpoint, banks were searching for ways to help Greece forestall the day of reckoning. In early November — three months before Athens became the epicenter of global financial anxiety — a team from Goldman Sachs arrived in the ancient city with a very modern proposition for a government struggling to pay its bills, according to two people who were briefed on the meeting. The bankers, led by Goldman’s president, Gary D. Cohn, held out a financing instrument that would have pushed debt from Greece’s health care system far into the future, much as when strapped homeowners take out second mortgages to pay off their credit cards”

Is Soros a Progressive or Just Another Opportunistic Hedge Fund Manger?
Max Keiser UK 2-17-10

While at Davos, George Soros claimed that gold was in the “ultimate bubble.”

What we now learn is that he was simultaneously doubling his position in gold.

Soros More Than Doubled Gold ETF Stake in 4th Quarter

I have followed Soros’ career for 25 years. His hedge fund comes first, his causes second. Any progressives out there who think Soros is their friend are fooling themselves. Why do I say this? Because any hope progressives have in championing their cause on the basis of a more honest approach to politics and economics will always have a tall mountain to climb as long as Soros is around - with his duplicity and slippery hedge fund tactics - also claiming to be progressive.

My guest explains his new campaign in the UK, ‘Save Our Savers.’ This is the British equivalent to the US’s Move Your Money campaign.

The movement to decapitalize the banksters has become global!

The job application black hole
February 18, 2010

NEW YORK (CNNMoney.com) — Ever applied to a job online only to have your résumé seemingly vanish into a void?

From crafting a winning cover letter to acing an interview, landing a job is tough enough in this market. But millions of job seekers can’t even get a foot in the door as they apply to countless positions and seldom hear anything in response.

“I’ve been looking since September. I send out résumés and nobody answers me,” said Vicki LaVista, 56, a former executive assistant who has not had any luck on the job hunt. “It’s already February and I don’t even have a bite,” she says.

LaVista estimates she applies to about 100 positions a week on sites like CareerBuilder, Monster and Craigslist, but never receives so much as a rejection form letter.

“I’d rather get feedback than no feedback. It would be better to hear ‘we hate you,’” she said.

Fed raises discount rate to 0.75 percent
February 18, 2010, 4:46 pm

WASHINGTON (Reuters) - The Federal Reserve said on Thursday it was raising the interest rate it charges banks for emergency loans, citing improvement in financial market conditions.

The Fed said the discount rate would be increased to 0.75 percent from 0.50 percent, effective Friday.

“Like the closure of a number of extraordinary credit programs earlier this month, these changes are intended as a further normalization of the Federal Reserve’s lending facilities,” the Fed said in a statement.

“The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy,” it said.